Sandberg talks ad challenges, teens, and Facebook's future

Tuesday, 11 Feb 2014 | 6:16 AM ET
Facebook's Sandberg on main apps and privacy
Tuesday, 11 Feb 2014 | 6:23 AM ET
Facebook COO Sheryl Sandberg explains how her company plans to expand its app business while maintaining privacy for users.

Now that Facebook gets more than half its revenue from mobile, the company is looking to get small and mid-sized businesses to buy more ads on its platform, said Sheryl Sandberg, the company's Chief Operating Officer.

Just a week and a half after Facebook's best quarterly results ever—surpassing expectations and sending the stock soaring—Sandberg sat down for an exclusive interview at the inaugural "Makers Conference," an event focused on women leaders.

Since Sandberg's last TV interview about the business—on CNBC in October 2012—Facebook has undergone a total transformation. Then, mobile cash was nearly non-existent; now, it's more than half of the company's revenue. Sandberg reflected on the biggest challenges of that transformation and where Facebook's going next.

Facebook's big investments

Sandberg said Facebook has been able to shift its revenue model in just a year and a half because of a relentless focus and where the company has been investing. "There have been three main investments we've made. The first is taking advantage and really doubling down on the shift to mobile," she said. "When it started happening, we really put all of our resources there and made a very fast shift.

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"The second is investing in attracting advertisers. We now have over a million advertisers. And having both the big brands and the long tail of the SMBs, small- to medium-sized businesses, makes a huge difference. And the third is our ad products. We've invested in targeting, in measurement, in simplification to make sure that we're putting products on the market that return for marketers, but also provide really good experiences for people who are using Facebook when they see the ads."

Facebook's Madison Avenue challenges

The biggest challenge in changing Madison Avenue's perception of Facebook has been proving that its ads work, Sandberg said. That started a year ago, by showing advertisers Facebook could improve "brand sentiment," she said. Over the last year, Facebook has invested in the tools to show a direct correlation between people seeing Facebook ads and making purchases both in-store and online. "That's really how the dollars started moving," Sandberg said.

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Now Sandberg is focused on making it easy for small- and medium-sized businesses to make the transition from setting up a Facebook profile, to start buying ads.

Facebook's teen relationships

When asked whether Facebook sees declining teen engagement, Sandberg said teens remain incredibly active on Facebook and Instagram. "And Facebook remains the best place to attract any broad audience, including teens," she said. When pressed about the perception that Facebook has a teen problem, she said: "We just look at what's happening. How teens are using Facebook, how older people are using Facebook, how people are making Facebook such a big part of their lives."

To illustrate how Facebook can successfully roll out new products that engage users, she pointed to the "Look Back Videos" Facebook launched for its 10-year anniversary last week. ("Look Back Videos" are one-minute compilations of Facebook users' posts and photos over the last 10 years.) Almost 200 million Facebook users viewed their own videos, Sandberg said, and half shared them with others.

Sandberg: Majority of FB's business targets apps & privacy
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This is an indication of how Facebook can launch new products that quickly gain traction—and inspire sharing—which is key for brands on the site, Sandberg said.

What Zuckerberg's vision for many apps means for ads

After founder Mark Zuckerberg laid-out a vision for launching a series of apps, the question for Sandberg was, how can the company move away from a single Facebook experience without alienating, or confusing, investors? "For the foreseeable future, the great majority of our business will come from our main app," Sandberg said. "As we roll out some of these new apps, we'll see what works, what takes off. There are things that will grow like Instagram has grown. And then we will be in a position to introduce monetization and ads."

Watch full interview here.

—By CNBC's Julia Boorstin. Follow her on Twitter: @JBoorstin.

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  • Matt Hunter is the senior technology editor at CNBC.com.

  • Cadie Thompson is a tech reporter for the Enterprise Team for CNBC.com.

  • Working from Los Angeles, Boorstin is CNBC's media and entertainment reporter and editor of CNBC.com's Media Money section.

  • Jon Fortt is an on-air editor. He covers the companies, start-ups, and trends that are driving innovation in the industry.

  • Lipton is CNBC's technology correspondent, working from CNBC's Silicon Valley bureau.

  • Mark is CNBC's Silicon Valley/San Francisco Bureau Chief covering technology and digital media.